Worried investors stay away from IPO market

MUMBAI: The initial public offers (IPO) launched during the last one week saw subdued participation from equity market investors as expensive valuations and volatility in the secondary markets forced many participants to stay away from the primary market.

The public issuances from Bharat Wire Ropes, Healthcare Global and Infibeam managed to just scrape through getting subscribed just over one times their issue size, even though companies like Infibeam spent heavily on advertising.
The Rs 450-crore IPO from Infibeam was subscribed 1.11 times while IPOs from Bharat Wires Rope and Healthcare Global were subscribed 1.21 times and 1.56 times respectively.

Infibeam is the first company from the e-commerce sector to tap the capital market through the IPO route. However market participants turned little sceptical due to the steep valuation demanded by the company.

At the higher end of the price band of Rs 432 per share, Choice Broking said the valuation sought by Infibeam is 39 per cent higher to its global peers such as Amazon.com, eBay Inc and Shopify Inc. “Thus we assign ‘avoid ratings to the issue,” it said.  

In the case of Rs 650 crore IPO from Healthcare Global Enterprises, the portion reserved for non-institutional investors category and retail investors remained under subscribed.

Analysts at Angel Broking pointed out the current challenges faced by the company and said that only long term investors should subscribe to the Healthcare Global IPO.

Similarly, the Rs 70-crore IPO from Bharat Wire Ropes also received adve-rse recommendations fr-om stockbrokers citing ex-pensive valuations.